A death is announced
My short and expensive (for my employer) career in the foreign exchange market is too painful to relate, even after 40 years. But it left me with a lasting regard for the dealers, analysts and industry, tough but fair would be my description of how they work.
Not for them the rose tinted glasses of the rest of the world, they’d sell their own mother and buy her back more cheaply if it would make ten pence.
So their opinion of the pound is worth noting, they think it is worth a lot less than it used to be and it has further to fall.
Analysis ranges from “interest rates needs to rise faster” to “you and your currency are a joke”.
The exchange rate reflects the relative prospects of different economies, their stability and trustworthiness. On all three criteria the UK’s currency is suffering.
Markets notice slow growth, political turmoil, inertia, Brexit and a government determined to pick fights with its neighbours and friends, regardless of the damage it does to the country or their reputation.
Deliberate self harm does not impress investors.
The result will be higher inflation for longer, as the pound buys less abroad, it also means more expensive holidays and it means the whole world notices with what regard the UK’s government is held by the markets.
It is widely considered to be a joke and a bad joke at that, which matters. The UK is very vulnerable to a run on the pound.
When your government is a joke, there are serious consequences.
Economics, trade and Brexit, not necessarily in that order but the dog always comes first.